Loan waiver no solution to farm distress: Experts

New Delhi : As the number of farmers’ suicide rises in Madhya Pradesh and their counterparts from other states take to streets demanding loan waiver on the lines of Uttar Pradesh and Maharashtra, experts say loan waiver can be a short-term solution but not a real answer to the country’s agrarian crisis.
Several bankers and economists, including former RBI Governor Raghuram Rajan, had warned of repeated loan waivers affecting credit pricing and disrupting the credit market. However, given the political emotions attached with the community — a huge vote bank spanning castes and religions — the voices failed to draw support.
Given the falling prices of produce and increasing production costs, an agriculture ministry official describes loan waiver as “an atonement of sins for all kinds of restrictions imposed on farmers by governments while pandering to consumers”.
With states like Haryana and Uttarakhand jumping on the loan-waiver bandwagon, the issue could become a major worry for the ruling party in the Centre ahead of the 2019 General Election.
Agriculture expert Sudheer Panwar says the government wants to double the farm income by 2022 through a transformation of Indian agriculture, but under present circumstances the only way it can fix some of the distress, despite a bumper crop, is by waiving debts, even though it is hardly a solution.
“Farm loan waivers can actually lead to adverse consequences, affecting agricultural outputs as wary banks get more selective in extending credit. But it has already been linked to the next General Election. If the BJP does not give an assurance on loan waiver to this huge vote bank, someone else will,” he says.
While political discourse continues to revolve around loan waiver and increasing the MSP, Panwar suggests identifying the farmers in real distress — the small and marginal ones which comprise almost 90 per cent of the farming community in the country. “The government needs to identify and make provisions for this segment. Loan waiver is not an answer for them as majority still depends on informal money-lending sector,” he says.
Despite the demand for it, some experts also believe increasing the MSP is also not the real answer. Only a limited number actually avails the benefit of the minimum assured price announced by the government, they say. Given that the benefit of the MSP does not reach a sizable number in the community, expert Devendra Sharma wonders “why is no one talking about the segment comprising small and marginal farmers”.
Former agriculture secretary Siraj Hussain adds: “Indian farmer has been under stress for the past three years, first due to consecutive droughts, then due to low prices. The demand for loan waiver is primarily a manifestation of farmers’ inability to receive remunerative prices. For many horticultural crops they are not even being able to realise the cost incurred.”
Sharma says it is time individual states devised specific plans, their own set of policies and individual farmer income commissions to suit specific needs. For example, the biggest mistake that CM Shivraj Singh Chouhan is believed to have made was not being able to read the ground situation in Malwa region of Madhya Pradesh, which was struggling to contain problem of the plenty, and take recourse.